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Toolkit for Competition
Advocacy in ASEAN
Toolkit for Competition
Advocacy in ASEAN
INDONESIA: Assessing the Degree of Competition in Key Sectors of the
Indonesian Economy
An important task of a CA is to continuously monitor
the degree of competition in strategic sectors of
the economy. This is particularly essential to assess
any changes in the competition situation following
enforcement or advocacy activities. Moreover, a
CA often comes under scrutiny from policy-makers
and the public who need to see evidence of the
effectiveness of a competition authority.
Although the competition law was passed in Indonesia
already in 1999, a survey conducted by Commission
for the Supervision of Business Competition (KPPU)
in 2009 still showed a relatively low degree of
awareness and acceptance among the business
community. The KPPU found that indicators would be
helpful to benchmark business compliance in selected
sectors and devised the Competition Perception Index
(CPI). The CPI serves to scientifically measure sectoral
performance on an annual basis. It looks at certain
criteria, such as enterprise and price structures, and
quality aspects. At present, the CPI is being piloted
to review two sectors, namely airlines and banking.
Aside from showing specific benefits of competition,
the CPI serves to check whether KPPU’s enforcement
or advocacy efforts have been successful. As such,
it is not only an internal monitoring tool, but also
helps explain the impact of KPPU’s work to external
stakeholders.
As indicated by the CPI, the airline industry has
become more competitive over the past years. Part
of this is due to an earlier recommendation provided
by KPPU concerning a cartel in the airlines industry.
Overall, the competition in the sector was not so
much on prices than on the quality and number
of enterprises. However, the CPI also reflected a
decrease in quality, which shows that competition
can lead to more choices for consumers, but not
necessarily comes with better service standards.
The development of the CPI was not an easy
undertaking as it requires reliable proxies, consistent
data samples and considerable financial as well as
human resources. The lack of similar indices applied
domestically also made public acceptance difficult.
KPPU therefore tapped the experiences of long-
standing CA, such as Australia, as well as that of other
agencies concerning related indices on corruption/
transparency or competitiveness.
The CPI has been instrumental in enhancing the
understanding about competition variables so that
they can be addressed in the KPPU’s strategic action
plan. It provides businesses with a vision on how
to enter or develop certain sectors, and it informs
consumers about the benefits of fair competition.
Finally, by providing evidence of “value for money”
on the work of the KPPU, the CPI has helped garner
public support, including from legislators and the
president, for competition reforms.
Take-Away Tips
The CPI can be utilised as a monitoring tool which
also helps determine further advocacy or enforcement
priorities. As shown by the example of the airlines
industry, higher competition should not comprise on
safety issues, which could be the focus of the advocacy
activity. The experience in Indonesia demonstrates that
constant efforts are necessary to develop and enhance
the methodology of the CPI, in regular consultations with
related agencies. The CPI also shows that reliable, up-to-
date data and evidence constitute the best arguments for
advocacy both within the government and vis-à-vis the
broader public.
SINGAPORE: Striking a Regulatory Balance regarding Disruptive Innovations
in Singapore’s Taxi Industry
Despite having one of the highest number of taxis
per capita in the world, it can be difficult from time
to time to get a taxi in Singapore, particularly during
peak hours. The reason is the difficulty in matching
the supply of taxis with the demand of commuters at
specific locations. In order to increase their chances
of hailing a taxi, many commuters therefore choose
to make a taxi booking instead of hailing a taxi from
the street. This can be done by calling any of the six
taxi companies directly, or through an online booking
using their respective mobile application (“apps”), at
a booking fee. Since 2013, so-called third-party taxi
booking apps have also become an increasingly popular
option. However, were met with protests by taxi drivers
and companies as they were perceived as avoiding
regulatory requirements as licensed taxi operators.
The Competition Commission of Singapore (CCS) has
the mandate to actively monitor industry developments
that may have an impact on competition in a market.
Although the taxi industry comes under the purview of
the competition law, the Land Transport Authority is the
regulator that licenses taxi companies and oversees
their service performance. Based on a market study,
the CCS found that the third-party apps could help
match the overall supply of taxis with the demand of
commuters. They do not only provide an additional
choice for consumers, but also enable taxi drivers to
get bookings from other sources besides their own taxi
company. As such, they contribute to competition in the
market for taxi bookings.
Aside from the benefits for competition, however, it
was also necessary to safeguard passenger interests,
notably regarding service standards. Unlike licensed
taxi companies, the third-party apps are not subject
to any form of regulatory oversight. In light of this, the
CCS initiated a discussion with LTA in order to share its
market study and ensure that LTA, in its own review,
considered the possible benefits of third-party apps,
along with the concerns raised by market players. The
LTA and CCS ultimately agreed to embrace “disruptive
innovations”, such as the third-party apps, as they
could bring about public benefit. At the same time,
they vouched to foster entry, growth and commercial
flexibility of third-party apps.
The new taxi regulations
3
which took effect in mid-
2015 have now made it compulsory for third-party
apps to apply for a certificate of registration every
three years. This was met with a positive response
by stakeholders and hailed as a pragmatic as well as
progressive approach to enhancing clarity and certainty
in the industry.There have been a number of indications
since that the market has benefited from the existence
of the third-party apps. The matching of taxi supply and
passenger demand rose from 65 per cent to 68 per cent
from January to May 2014. This is generally attributed
to the growth in use of third-party apps. Moreover, there
are further improvements and innovations of the third-
party and taxi companies’ apps alike, such as more
user-friendly interfaces.
Take-Away Tips
The policy towards the third-party booking apps in
Singapore, as evident in the new taxi regulations, is
a good example of how competition, consumer and
industry concerns can be effectively balanced. It shows
how a competition agency and a sector regulator can
reach a common understanding and apply a coherent
approach to the benefit of different stakeholders. This
outcome would have hardly been possible if not for the
relationship that CCS has built with LTA over the years.
3.
Once registered, the third-party apps are required to dispatch only licensed taxis and drivers, and to uphold certain standards to safeguard passenger interests. For example, the apps must disclose upfront all
information on fare rates, surcharges and the fees payable for the journey.They must also make it optional for commuters to specify their destination before they make the booking.The provision of basic customer
support service, e.g. lost-and-found and service feedback, became mandatory as well. In addition, booking fees charged cannot exceed the booking fees charged by the taxi company. Bidding and pre-trip tipping
for taxi services will not be allowed to ensure that taxi services remain equally accessible to all.
